In life, sometimes it’s just luck that makes the life-changing decisions we make look genius. In real estate, the importance of the old adage, “location, location, location” is only surpassed by timing – and you can’t plan timing.
The summer of 2020 started the pandemic buying spree and combined with interest rates dropping to 3% it was all-out insanity. Nationally, the median number of days on the market in 2019 pre-pandemic was 30 to 40. In 2020 that number started to drop into the 20s and into the teens in 2021-22.
Florida in general has experienced a longer number of days to get properties into contract. Specifically, Manatee County, as of the last set of statistics released by the Realtor Association of Sarasota and Manatee, reports that single-family homes took 28 days to get into contract as opposed to 5 days last year. Most of this is a reflection of the low inventory available, slightly higher than last year but still historically low.
Buyers who were lucky enough to buy when mortgage rates were low and homes were still available will benefit from that decision for decades, affecting every other aspect of their life choices. Those buyers who missed the market blame themselves for taking their eye off the ball and not acting faster or not taking a risk. Some of this may be true, but frankly, no one during those years really knew what was going to happen. The entire population of the country was frozen in place both literally and figuratively, making decision-making difficult, especially for first-time and marginal buyers.
Similarly, the run-up to the financial crisis and the bursting of the housing bubble in 2008 was unpredictable. Buyers and investors were buying anything and everything for overinflated prices. When the bubble exploded, the value of their properties declined so much it took a decade for some of it to come back.
An economics professor at the University of Georgia presented this hypothetical I recently read. A buyer who purchased a house in June of 2020 for $300,000 – about the median for homes at the time – with a 20% down payment and a 3% mortgage rate would pay about $89,000 in interest over the first 15 years of a 30-year loan. By comparison, someone who bought at the same price in June of 2022 with a 6% mortgage rate would pay about $190,000 in interest over 15 years. Two years made an enormous difference.
But this is now and even if you feel you didn’t act three years ago, you can act now. Economists have always believed that homeownership is an important generator of wealth. They focus on moving forward, especially for young first-time buyers who have years ahead of them to create wealth. Americans have more faith in real estate that in any other investment. A recent Gallup survey indicated that 34% of Americans rated real estate the best long-term investment, down from 41% in 2021 and 45% in 2022.
The lesson here is that buying a home is a more important decision than when you buy that home. You have to be in it to win it, you have to be in it to create a family home, and you have to be in it to create the biggest generator of wealth this country has ever consistently had. Timing is important, but action is long-term.
